TAHOE-SIERRA
PRESERVATION COUNCIL V.
TAHOE REGIONAL PLANNING AGENCY:
THE SUPREME COURT'S LATEST WORD ON REGULATORY TAKINGS
by Frank A. Shepherd *
For the last 15 years, most decisions involving the use of private property emanating from the United States Supreme Court have been generally favorable to property owners. See, e.g., Palazzolo v. Rhode Island, 533 U.S. 606, 150 L. Ed. 2d 592, 121 S. Ct. 2448 (2001). In the term just ending, however, the Court issued an important opinion that many have hailed as a major victory for government regulators who seek to slow or restrict the land development industry. The case, Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 122 S. CT 1465 (2002), decided on April 23, held that a temporary moratorium on land development around Lake Tahoe did not amount to a "per se" taking automatically requiring the payment of compensation under the Takings Clause of the Fifth Amendment to the United States Constitution. Rather, the Court held, moratoria or "interim development controls" as the Court also termed them, are an essential tool of successful development, that can be used by local and state governments to formulate development strategies for their communities without necessarily running afoul of the Fifth Amendment. Id. at 1487. However, the Court took pains to "clarify the narrow scope of [its] holding" to assure landowners that government regulators do not have carte blanche to delay land use planning and permit decision making in their respective jurisdictions. Id. at 1470. The case bears careful scrutiny by those who work in the land use field.
FACTUAL SUMMARY AND LOWER COURT HISTORY
In order to preserve the clarity of Lake Tahoe, which straddles the boundary of California and Nevada, a congressionally authorized planning agency, the Tahoe Regional Planning Agency (TRPA), imposed a temporary moratorium on all land development in the Tahoe basin in 1981. The moratorium was extended into 1984. In that year a regional plan was adopted, but a federal district court immediately held that the plan was unlawful and enjoined TRPA from allowing any land use until the plan was improved. In 1987, a regional plan was adopted that prevented most landowners from making any use of their property.
In 1984, as the moratorium continued to drag on, 450 landowners filed suit in the United States District Courts of both Nevada and California alleging that the actions of TRPA had constituted a taking of their property for which just compensation was required under the Fifth and Fourteenth Amendments of the United States Constitution.(1) After a long series of contentious appeals and remands, a Final Judgment was finally issued on January 15, 1999 by Judge Edward C. Reed of the United States District Court for the District of Nevada, before whom the cases were consolidated. The key holdings were as follows:
1. The litigants failed to amend their complaint within the statute of limitations to allege that the 1987 plan effected a facial taking of their property;
2. The moratorium in place from 1984 to 1987 was not TRPA's fault because it was imposed by a court injunction and TRPA could not be held liable for a taking;
3. There was no partial taking during the 32 month moratoria from 1981 to 1984 as analyzed under the balancing tests of Penn Central v. Transportation Co. v. New York City, 438 US 104 (1978) (courts must balance economic impact, distinct investment-backed expectations, and character of government regulation); and
4. There was a total temporary take of the property during the 32 month moratorium period under the standard of Lucas v. South Carolina Coastal Council, 505 US 1003 (1992) (total take), and First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 US 304 (1987) (temporary takings).
Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 34 F. Supp. 1236 (D. Nev. 1999).
TRPA appealed holding four to the United States Court of Appeals for the Ninth Circuit. The landowners appealed holdings one and two but not three. The Ninth Circuit, led by Judge Stephen Reinhardt, affirmed the first two holdings, but reversed the District Court's holding four that had found a total temporary taking of the landowners' property to have occurred during the 32 months from 1981 through 1984. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 216 F. 3d 764 (9th Cir. 2000). In a remarkable dissent to the Ninth Circuit's refusal to hear the case en banc, Judge Alex Kozinsky noted how the panel opinion failed to follow binding United States Supreme Court, quoting passages to illustrate how the opinion tracked, if not plagiarized Justice Stevens' First English dissent. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 228 F. 3d 998, 1000 (9th Cir. 2000) ("While the opinion nowhere cites Justice Stevens' First English dissent, the reasoning -- and even the wording -- bear an uncanny resemblance").
THE UNITED STATES SUPREME COURT
Landowners, or at least those that were still alive, petitioned the United States Supreme Court for certiorari. As if to presage the wish of the Ninth Circuit panel members, not only was the petition for certiorari granted, but the majority opinion was ultimately written by Justice Stevens. However, rather than accept petitioners' wide-ranging proposed questions presented, the Supreme Court limited the question to be considered to one: "Whether the Court of Appeals properly determined that a temporary moratorium on land development does not constitute a taking of property requiring compensation under the Takings Clause of the United States Constitution?" Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 121 S. CT 2589 (9th Cir. 2001). On April 23, 2002, Justice Stevens, joined by his more liberal allies and the centrists on the Court, affirmed the decision of the Ninth Circuit. 122 S. CT at 1465.
Early in the opinion, the Court majority led by Justice Stevens took the opportunity to yet again re-characterize the issue presented to the following: "whether the mere enactment of a temporary regulation that, while in effect, denies a property owner all viable economic use of her property gives rise to an unqualified constitutional obligation to compensate her for the value of its use during that period." Id. at 1477. To ask such a question is, of course, to answer it. Purporting to eschew all such "per se" rules, and ignoring the plight of the several hundred remaining and mostly elderly landowners who had been denied all use of their property for decades, the Court found that it would be improper to engage in temporal severance of the whole parcel. In other words, it would be improper to find a taking under a Lucas "total take" theory when the denial of use was only temporary, and there remained the possibility of present value from future uses. And focusing on just the first 32 months of moratoria, the Court found no taking.
In rather expansive dicta, the Court reaffirmed the notion of the "parcel as a whole" meaning that a takings analysis must embrace whatever nearby or contiguous property a landowner might own in addition to that which has been regulated into inutility. (Obviously, the more of a landowners' property holdings are considered in a takings analysis, the less likely the regulatory confiscation of a part of that property will be severe enough to constitute a compensable take.) Interestingly, this concept was called into question just last year in dicta in Palazzolo v. Rhode Island, 533 US 606, 121 S. CT 2448, 2465 (2001). Nevertheless, the discussion of the "parcel as a whole issue" was used by the majority to illustrate the majority's understanding that a larger parcel will not be divided into temporal slices for purposes of a takings analysis. However, the viability of the idea that a larger parcel cannot be divided into discrete areal segments remains undecided. This was not the real issue in Tahoe. As in Palazzolo, the issue had only been raised peripherally. It remains for future litigation to resolve the question of how much of a landowner's property must be considered in a takings analysis. It may be important, therefore, to keep a close watch on developing cases that might raise this issue again before the Court.
The majority opinion also extensively recited in dicta passages from Justice O'Connor's concurring opinion in Palazzolo where she emphasized the importance of timing in considering the investment backed expectations in a Penn Central style takings analysis. The Court opined that a temporary moratorium might be a taking, and that a court could analyze one or more of "seven different theories" in making such a determination. 122 S. CT at 1484-1485. Unfortunately for the landowners here, they had waived their Penn Central claim by not appealing the trial court's holding that there was no taking under Penn Central.
The opinion's dicta also called into question the chilling impact that a rule requiring the payment of compensation for temporary moratoria would have on the planning process. In a virtual paean to planning, the Court emphasized the importance of land use planning and how devastating it would be if any Court ruling interfered with that process. Id. at 1487-1489. Besides, the Court gratuitously noted, the moratorium was a broadly applicable legislative enactment that afforded "reciprocity of advantage" to all. Id at 1488. Landowners, to be sure, would beg to differ as they have in fact realized only distinct disadvantages from the moratoria.
Three justices dissented. Chief Justice Rehnquist, writing for himself and Justices Scalia and Thomas, began by questioning the Court's addressing only the first series of moratoria that lasted 32 months when the pre-1987 use limitations actually lasted six years. Because TRPA was responsible for the additional three year court-imposed injunction, it could not escape liability for the takings implications from the denial of use during that period, wrote the dissenters. And because of the "practical equivalence" between these six years of moratoria and a leasehold, they argued that the Court should have found this case to be analogous to World War II era leasehold taking cases. Id. at 1493, citing United States v. Petty Motor Co., 327 US 372 (1946). What's more, the dissenters urged, there can be no argument that a six year denial of use inheres in the background principles of real property law. 122 S. CT at 1494.
Justice Thomas dissented separately, joined by Justice Scalia, to criticize the application of the "parcel as a whole" theory to temporary moratoria. If there is any relevance to the length of a regulatory delay, it ought to go to the amount of compensation, not liability. The imputation of present value to the property from a potential future relaxation of the moratoria is cold comfort to the landowners, the dissenters wrote. "After all, 'in the long run we are all dead.' John Maynard Keynes, Monetary Reform 88 (1924)." Id. at 1497.
Ultimately, when the dicta is teased out of the main opinion, the decision is indeed very narrow: temporary moratoria of all land use do not constitute per se takings. The dicta, much of it contrary to dicta in Palazzolo issued less than a year prior to this case, settles nothing. Only future cases will resolve those conflicts. As for the Tahoe property owners, they must now apply for permits and, upon denial, bring as-applied regulatory takings challenges. Sadly, most of these landowners are too old and not wealthy enough to pursue regulatory takings cases against TRPA.
*Managing
Attorney, Pacific Legal Foundation Atlantic Center, Miami, Florida. Formed in
1973, the Pacific Legal Foundation is a public interest law foundation that
concentrates in the fields of property rights, land use, and environmental matters.
It has offices in Sacramento, CA (our HQ), Bellevue Washington, Honolulu, Hawaii
and Miami, Florida. See
(1) Often referred to as the "Just Compensation Clause," the final clause of the Fifth Amendment provides: "nor shall private property be taken for a public purpose without just compensation."
(Editorial note: The opinion
can be found at
http://a257.g.akamaitech.net/7/257/2422/23apr20021030/www.supremecourtus.gov/opinions/01pdf/00-1167.pdf)